Star Entertainment Group receives debt refinancing offer from Oaktree Capital Management
Star Entertainment Group has received an offer to buy out its hefty debts, as the casino operator faces an ongoing battle for its survival. Read the details
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Star Entertainment Group has received an offer to buy out its hefty debts as the casino operator faces an ongoing battle for its survival.
In a statement to the ASX on Monday morning, Star said it had received a $650m debt refinancing offer from funds associated with Oaktree Capital Management.
The Star has faced pressure from lenders, anger from shareholders, ambiguity from governments and increased gambling regulations which were drastically increasing costs.
The group made almost $300m less in the second quarter of the financial year than in the first quarter, despite revenue growing at The Star Gold Coast.
The embattled group – and its 9000 staff – had been increasingly on edge since announcing the company had spent more than $100m cash in three months.
The Star’s statement said the conditional Oaktree offer would provide a total of $650 million in two debt facilities with a term of five years.
The proposal is subject to numerous conditions, including “a comprehensive security package” which needed NSW and Queensland Government approval, as well as due diligence and a settlement and or refinancing agreement with existing lenders.
“The Board of The Star will consider the Proposal,” the statement said.
“There is no certainty that the Proposal will be progressed, that the conditions to the Proposal will be satisfied, or that the Proposal will be implemented.
“If The Star proceeds with the Proposal, the Company will require additional funding for the period prior to the Proposal being implemented.”
The Star said there was still “no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position”.
“In the absence of one or more of those arrangements, there remains material uncertainty as to the Group’s ability to continue as a going concern,” it said.
On February 10 the embattled company revealed it had knocked back offers from its Hong Kong partners to buy out its Queen’s Wharf casino precinct in Brisbane.
In a statement to the ASX, The Star said it had received “several confidential, indicative and non-binding proposals” from Chow Tai Fook Enterprises Limited and Far East Consortium International Limited, which owns a half share of the Destination Brisbane Consortium assets in the CBD.
The statement said “material uncertainty” remained in whether it would continue as a going concern amid a multi-front financial battle with lenders and Government fines and restrictions.
The consortium partners also hold a 60 per cent share of The Star Gold Coast’s assets.
That announcement came as a six-week trial of former Star executives alleging they breached money-laundering controls and didn’t fulfil corporate fiduciary duties began in the Federal Court.
The Australian Securities & Investments Commission (ASIC) launched proceedings against 11 current and former Star executives and directors in 2022 for various breaches of the Corporations Act, which can attract individual penalties of up to $1.56m.
The Star revealed its latest financial results on January 20, noting a “material uncertainty” over its ability to stay afloat.
Star CEO Steve McCann last month said the group could return to profitability if given more “time and support”, but was realistic about the enormity of the turnaround task.
The Star made a financial provision of $399.5m in 2024 – which it hoped would cover the Austrac fine as well as a suite of other fines, underpaid taxes, ASIC proceedings, a looming class action, consultant costs and legal fees.
It had also been in a battle to keep its Queensland casino licence and to refinance $1.6bn of debt for Queen’s Wharf.
Originally published as Star Entertainment Group receives debt refinancing offer from Oaktree Capital Management
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